BHARAT PETROLEUM CORPORATION

COMPANY PROFILE

Incorporated in 1952, Bharat Petroleum Corporation Limited is an Indian state-controlled oil and gas company. The Company was formerly known as Bharat Refineries Limited and changed to its current name 1977. The Company is engage in the refining of crude oil and marketing of petroleum prod- ucts, as well as exploration and production of hydrocarbons. Bharat Petroleum Corporation Limited (BPCL) offers liquefied petroleum gas (LPG), naphtha, motor spirit, aviation turbine fuel, kerosene oil, high speed diesel, light diesel oil, and mineral turpentine oil; and furnace oil and lubricants.

The Company’s marketing network includes depots, aviation service stations, retail outlets, LPG bottling plants, and LPG distributors. Bharat Petroleum Corporation Limited (BPCL) has interests in 26 exploration blocks, which include 11 blocks located in India; and 15 blocks lo- cated in Australia, East Timor, Indonesia, United Kingdom, Mozambique, and Brazil.

STOCK INFORMATION

STOCK PRICE

745.85

TARGET PRICE

775-785

SECTOR

REFINERIES

SYMBOL (AT NSE)

BPCL

ISIN

INE029A01011

FACE VALUE (IN RS.)

10.00

BSE CODE

500547

STOCK FUNDAMENTALS

MARKET CAP

53931.24

BOOK VALUE

269.11

EPS - (TTM) (IN RS. CR.)

64.44

P/E

11.57

INDUSTRY P/E

13.79

INVESTMENT RATIONALE

The company’s Likely increase in marketing margins to drive earnings: We expect OMCs earnings growth from (a) fall in working capital, (b) increase in marketing margin (like petrol) and (c) shift to import parity pricing in the long term. Likely Bina refinery IPO in 1-2 years could help unlock value for BPCL. Bharat Petroleum Corporation Limited (BPCL) has 49% stake in the ~Rs114b Bina refinery, which has a capacity of 6mmtpa (expansion under considera- tion). BPCL's E&P portfolio is likely to add substantial value as it completes its appraisal program and gives out the re- source/reserve numbers. BPCL’s gross debt has reduced sharply by INR62b (30%) led by lower working capital loan due to monthly diesel price hikes. Bharat Petroleum Corporation Limited (BPCL) is yet to receive INR15b subsidy compensation from the govt. and has oil bonds of INR50b on its balance sheet. We estimate BPCL’s return ratios to remain strong with FY16 RoE of 19%.

SHAREHOLDING PATTERN

BPC IMG

OUTLOOK AND VALUATION

Diesel price hikes and eventual deregulation in Oct-14 is ex- pected to result in 52% reduction in under recoveries by FY16 v/s FY14 to INR674b. For OMC’s, earnings growth bene- fit is already seen from reduction in interest cost and now expect to be driven by higher marketing margin in diesel (similar to petrol). We model additional diesel margin of INR0.5/ltr in FY16/FY17. The stock trades at 12.5x FY16E EPS of INR61.4 and 1.3x FY16E BV (adjusted for investments). Bharat Petroleum Corporation Limited (BPCL) is our top pick among OMCs for its E&P potential.

RESULTS (Quarterly )(Rs CR.)

 

SEP' 14

JUN' 14

MAR' 14

DEC' 13

SEP' 13

Sales

62,025.16

66,790.22

74,771.96

64,767.62

61,784.51

Operating profit

1,117.57

1,520.14

6,357.73

-915.82

1,707.73

Interest

129.16

194.81

204.84

304.53

324.39

Gross profit

1,243.53

2,348.57

6,575.64

-969.55

1,840.15

EPS (Rs)

6.42

16.82

56.26

-15.06

12.88

TECHNICAL VIEW

BPC Tech View

Bharat Petroleum Corporation Limited (BPCL) LTD is looking strong on charts. We advise to buy around 750-760 with stoploss of 730 for the targets of 775- 785 levels. RSI is also showing upside momentum in it on weekly charts.

SYMBOL

VALUE

ACTION

RSI(14)

68.207

BUY

STOCH(9,6)

70.772

BUY

STOCHRSI(14)

57.195

BUY

MACD(12,26)

26.300

BUY

ADX(14)

43.118

BUY

WILLIAMS %R

-19.795

OVERBOUGHT

CCI(14)

125.8490

BUY

ATR(14)

48.1893

LESS VOLATILITY

HIGH/LOWS(14)

29.2857

BUY

ULTIMATE OSCILLATOR

55.384

BUY

ROC

11.049

BUY

BULL/BEAR POWER()13

97.1420

BUY

BUY: 10 SELL:0 NEUTRAL: 1

SUMMARY : STRONG BUY

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

IDEA

SELL

159.40

160-162

165

155-150

ONE WEEK

PFC

BUY

311.80

308-312

302

318-324

ONE WEEK

BANK OF INDIA

BUY

290.80

285-290

278

296-304

ONE WEEK

UCO BANK

BUY

89.00

87-89

85

92-95

ONE WEEK

BANK BARODA

BUY

1096.60

1080-1100

1060

1120-1140

ONE WEEK

Performance of Previous Week

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE/LOW/HIGH

KTK BANK

 

BUY

140-145

134

150-160

16000.00

NEAR TGT

145.55 / 148.85

ADANI PORT

 

BUY

295-298

292

304-309

0.00

NEAR COST

262.05 / 261.00

LUPIN

 

BUY

1425-1450

1400

1480-1490

15000.00

TGT HIT

969.55 / 984.75

VOLTAS

 

BUY

270-272

266

276-280

0.00

NEAR COST

45.95 / 44.75

HINDALCO

 

BUY

155-158

150

162-165

16000.00

BOTH TGT HIT

174.70 / 176.40

ADANI ENT

 

BUY

485- 490

475

500-510

8000.00

FIRST TGT HIT

152.45 / 153.45

NET PROFIT

 

 

 

 

 

55000.00

 

 

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This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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